1. Describe how, if at all, each of the following developments affects the break-even and actual investment line in the diagram for the Solow growth model: (a) The rate of depreciation falls. (b) The rate of technological progress rises. (c) The production function is Cobb-Douglas, f(k) = ka, and capital's share, a, rises. (d) Workers exert more effort, so that output per unit of effective labor for a given value of capital per unit of effective labor is higher than before.

1. Describe how, if at all, each of the following developments affects the break-even and actual investment line in the diagram for the Solow growth model: (a) The rate of depreciation falls. (b) The rate of technological progress rises. (c) The production function is Cobb-Douglas, f(k) = ka, and capital's share, a, rises. (d) Workers exert more effort, so that output per unit of effective labor for a given value of capital per unit of effective labor is higher than before.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1.
Describe how, if at all, each of the following developments affects the
break-even and actual investment line in the diagram for the Solow growth
model:
(a) The rate of depreciation falls.
(b) The rate of technological progress rises.
(c) The production function is Cobb-Douglas, f(k) = ka, and capital's share,
a, rises.
(d) Workers exert more effort, so that output per unit of effective labor for
a given value of capital per unit of effective labor is higher than before.

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